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Investors with “good will” are a key piece to the puzzle if Australia is to solve its housing shortage problem for vulnerable people, a new report has found.

With almost 200,000 people on social housing waiting lists across the country, housing experts have found social impact investment would provide a lifeline to the nation’s most vulnerable groups.

Impact investing – when investors seek to make a positive impact while at the same time making a financial gain – can stack up, according to the report by the Australian Housing and Urban Research Institute (AHURI) and the Centre for Social Impact.

“Public housing stock just can’t cater to the [size of the] vulnerable low-income population anymore,” said professor Paul Flatau, study author and Director of the Centre for Social Impact at The University of Western Australia.

“Evidence shows [social impact investing in property] can be a success,” he said. “We’ve done the financial modelling … to see if investors are still getting a reasonable return at the low end of the rental market, and the answer is yes.”

However, given affordable and social housing properties rent at below market rate, it requires socially conscious investors who are happy to accept a lower return on an asset that offers more than just financial gain.

Given it’s a “hard ask” to get investors to accept lower returns, Mr Flatau said government assistance would also be required through measures such as capital gains discounts or tax concessions.

In addition to the Commonwealth’s bond aggregator model which will help fund community housing and social impact bonds that help provide social services, the report recommended further consideration of multiple measures – including investment by mutual funds which would enable investors to create a portfol